In boost for Renzi, Italy drilling referendum fails to draw quorum

ROME (Reuters) - A referendum aimed at curbing Italy’s offshore oil and gas industry was sunk on Sunday when it failed to secure the necessary quorum, with a sizeable majority of voters shunning the ballot, initial data showed.

Eni "Angela Angelina", the closest platform to the coast for the extraction of gas within 12 miles, is seen at Lido Dante, near Ravenna, central Italy, April 5, 2016. REUTERS/Stefano Rellandini

The result was a relief for Prime Minister Matteo Renzi, who had called on people to abstain, saying the vote was unnecessary and would have hurt the economy. It was also good news for energy firm Eni which potentially had the most to lose.

Turnout was estimated at just over 30 percent according to preliminary data supplied by the Interior Ministry, well under the 50 percent plus one vote needed to make the ballot valid.

The referendum had asked Italians whether the government should stop renewing offshore drilling licenses within 12 miles (20 km) of the coast.

New drilling concessions are no longer being handed out, but Renzi said existing sites should have the option to remain operational until they are fully depleted, warning that 11,000 jobs would have been put at risk had the referendum passed.

The ballot was proposed by nine regional assemblies, most of them run by Renzi’s own centre-left Democratic Party, which object to drilling platforms because of worries about the environment, as well as the impact on tourism.

“Italy has spoken. The result is clear, above our expectations,” Renzi said in a combative televised address in which he criticised those who had pushed for the ballot, saying it had cost more than 300 million euros ($340 million) to stage.

Italy imports around 90 percent of its energy needs and successive governments have looked to boost domestic production to reduce dependence on foreign suppliers such as Russia’s Gazprom.

There are 69 exploration concessions in Italian waters, most of them gas, the industry ministry says. Of these, 44 fall within the 12-mile range, most of them run by Italy’s Eni.

If the referendum had succeeded, these 44 fields would have been shut when their concessions expired, even if they were still operational.

Environmental watchdog Legambiente and other green groups say domestic oil and gas production is minimal and that a continued focus on fossil fuels takes Italy further away from its renewable energy and carbon targets.

Gas production from offshore fields inside the 12-mile area currently accounts for around 3 percent of Italian consumption while oil output in the area makes up just 1 percent.

While the short-term impact of a “Yes” vote would have been minimal it would have had long-term implications, because by 2027 the offshore fields could account for more than 20 percent of Italy’s oil and gas production, said Alessandro Pozzi, an analyst at Mediobanca.

The referendum came at an awkward time for Renzi. An influence-peddling case centred on the country’s main landlocked oil-producing area triggered the resignation of the industry minister two weeks ago.

Opponents sought to use the scandal to bring voters out to test the government ahead of June local elections, in which Renzi’s party risks losing control of several cities.

While the prime minister played down Sunday’s referendum, he has said he will resign if he loses another referendum slated for October on constitutional reform.